Packaged bank accounts: do the monthly fees justify the ‘free’ insurance & breakdown cover?

Packaged bank accounts offer a variety of perks in return for a monthly fee. But do the fees justify the cost? Karl Talbot takes a look.

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Packaged bank accounts come with a monthly fee. But in return, they offer perks such as free insurance or breakdown cover. So are packaged bank accounts worth it? And can getting one actually save your money? Let’s do the sums.

[top_pitch]

How do packaged bank accounts work?

Packaged bank accounts are often marketed as ‘premium’ current accounts due to the fact that they come bundled with perks.

A host of big-name banks currently offer packaged accounts, with fees ranging from £13 to £75 per month. 

It’s worth knowing that aside from the perks, packaged bank accounts work just like normal bank accounts. This means you can use internet banking to send and receive payments, and you’ll be given a debit card. Some packaged bank accounts even pay interest.

What are the best packaged bank accounts available?

Here’s a rundown of the top-rated packaged bank accounts available at the moment.

1. Nationwide FlexPlus

Nationwide’s FlexPlus account has a £13 monthly fee, which makes it the cheapest packaged bank account. In return, you get family mobile phone cover, worldwide family travel insurance (for those aged 70 or younger), as well as UK and European breakdown cover for the account holder.

The travel insurance covers you, your partner and your dependent children. If anyone in your family is over 70, then you can pay £65 per year to upgrade the cover. The phone cover applies to mobiles belonging to you, your partner and dependent children.

If you’re interested in this account, you can currently bag a £125 bonus if you switch.

2. Virgin ‘Club M’ 

For a slightly higher £14.50 monthly fee, Virgin’s ‘Club M’ account offers similar perks to Nationwide. It offer’s family phone and gadget cover, worldwide family travel insurance (for those 75 or younger), as well as UK breakdown cover for account holders.

Plus, you can earn an impressive 2.02% AER variable interest with this account, but only on your first £1,000.

If you switch to this account, you can grab a £150 Experience Day voucher.

3. Co-op Everyday Extra 

For £15 per month, Co-op’s Everyday Extra account offers mobile phone cover for the account holder, worldwide family travel insurance (for those aged 79 or younger), as well as UK and European breakdown cover for the account holder.

You can also earn up to £2.20 per month in cashback via Co-Op’s Everyday Rewards scheme, which can effectively bring down the monthly fee.

4. Halifax Ultimate Reward

Halifax’s Ultimate Reward account charges £17 per month. In return, it provides mobile phone cover for the account holder, worldwide family travel insurance (for those aged 70 or younger) and UK breakdown cover.

In addition, it also provides home emergency cover which will protect you if there’s an unexpected incident at home, such as an uncontrollable plumbing leak. With this account, you also qualify for Halifax Rewards, where you can earn up to £5 each month. 

What other packaged bank account options are there?

Aside from the above options, HSBC and Citi Bank also offer packaged bank accounts.

The HSBC Premier account offers worldwide family travel insurance for those aged 70 or under, and doesn’t have a fee. However, to qualify for the account, you must earn £75,000 each year and have an HSBC mortgage, investment, or life insurance product. Alternatively, you can have at least £50,000 saved or invested with HSBC.

The Citigold account also offers worldwide family travel insurance that covers those aged up to 79. There’s no fee if you have £150,000 saved across Citi UK accounts. If not, there’s an enormous £75 monthly fee to pay.

[middle_pitch]

Are packaged bank accounts worth it?

It’s fair to say that most people would prefer not to pay a fee for their bank account. Yet, packaged bank accounts can be good value if you know you’ll get value out of the included perks. 

For example, if you buy annual travel insurance for you and your family each year, and you (or your family) all own mobile phones, then you should work out the cost of what you normally fork out for these two types of cover.

If the cost is more than £156 per year, which is possible, then a packaged bank account could be for you. 

However, if you don’t have any children in your household, or you don’t own an expensive phone, then it’s less likely that a packaged bank account is worth having.

This is probably also the case if you’d like to have worldwide family travel insurance. That’s because these types of policies can be purchased for less than the typical monthly cost of a packaged bank account. 

If you are looking for a standalone travel insurance policy, see our guide that explains how to find the best travel insurance deals.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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